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2.4​ ​Turkey sees second-hand cars boom as millions hedge against inflation and falling value of savings
Millions of Turks have reportedly been snapping up used cars in a surprising hedge against inflation and falling interest rates in Turkey in the wake of the 2018 lira crash. The situation has sent their prices surging at a time when inflation and currency depreciation have eaten away at savings.
In December, used cars accounted for 95% of all cars sold in Turkey. “I’ve been in the second-hand car business for 11 years, and I’ve never seen anything like this,” Sami Nacaroglu, who runs a website that sells used cars, told Bloomberg.
Not knowing when the currency crisis would end, dealers in new cars didn’t make enough fresh orders to rebuild inventories after depleting their stocks, Nacaroglu added. Once interest rates began to fall and demand for new cars from consumers took off, Turkey didn’t have enough new cars to go around.
In the past two years, the average price of gasoline-powered cars more than doubled, while for diesel cars, which are more popular in Turkey, it went up by a huge 120%.
Some 6.23mn second-hand cars were bought in Turkey last year, one-fifth up on the sales figure in 2017, the year before the currency meltdown. But sales of new vehicles shrank by almost half to 387,000.
Financing is on hand for just about anyone. Aggressively easing since last July, the central bank has more than halved its benchmark rate to 10.75%, pushing loan rates down. The average annual rate on car loans plunged more than 20 pp since September 2018 to under 14% at the end of January.
Although prices of both new and used vehicles have crept higher, Turks are overwhelmingly opting for second-hand cars. The reason is partly because new cars require a bigger initial investment and then lose value more rapidly, Bloomberg noted in its report. The market is so topsy-turvy, it said, that second-hand prices have become comparable with the cost of brand new vehicles.
But investors should be wary of slamming the foot on the gas, for the bonanza could soon be over. “Should the prices of new cars be appealing and their supply increase, then we’ll most likely see a retreat in the used-car market,” according to Toygun Onaran, head of equity research at Istanbul-based Oyak Securities in Istanbul.
2.5​ ​Banks ‘hire Ernst & Young to analyse forming asset management company for billions in bad debt’
The Banks Association of Turkey ​confirmed the hiring of the professional services firm to Reuters on February 21​. Ernst & Young aims to publish a preliminary report on the viability of an AMC in March or April, two people familiar with the plan were cited as saying separately.
State and private lenders have been looking at forming an AMC to help clean up $25bn in NPLs weighing on their books.
8​ TURKEY Country Report​ March 2020 ​ ​www.intellinews.com